FCA and BOE release discussion papers on stablecoin regulations in the UK
The UK's plans to regulate stablecoins have been set in motion by the release of these discussion papers.
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On Nov 6, the Financial Conduct Authority (FCA) of the United Kingdom (UK) and the Bank of England (BOE) released discussion papers outlining their plans for regulating stablecoins in the UK.
Along with these documents, the BOE’s Prudential Regulatory Authority (PRA) has issued a letter to the CEOs of deposit-taking institutions regarding banks’ use of deposits, e-money, and stablecoins. The BOE has also released a “cross-authority roadmap†to link all the documents and explain how the various regimes interact.
The UK government stated their plans of regulating fiat-backed stablecoins in the UK through a document published on Oct 30. According to the document, His Majesty’s Treasury intended to introduce specific legislation in Parliament in 2024, bringing the regulation of fiat-backed stablecoins under the Financial Conduct Authority’s (FCA) mandate.
The FCA’s discussion paper explores the same ground in much greater detail. “Our aim is to reduce the serious risks and harms that we have seen in the market, ensure that consumers have appropriate protections when using this money-like instrument and that market integrity is upheld in line with our objectives,†says the FCA in the discussion paper.
The paper outlines potential retail and wholesale stablecoin use cases. It covers discussions on auditing and reporting, the backing of coins owned by issuers, and the independence of the backing assets’ custodian. Moreover, the FCA proposes to apply existing regulatory frameworks to stablecoins with some adaptations.
